Reference no: EM131379262

1. What is a firm's intrinsic value? Its current stock price? Is the stock's "true" long-run value more closely related to its intrinsic value or to its current price?

2. Should stockholder wealth maximization be thought of as a long-term or a short-term goal? For example, if one action increases a firm's stock price from a current level of $20 to $25 in 6 months and then to $30 in 5 years, but another action keeps the stock at $20 for several years but then increases it to $40 in 5 years, which action would be better? Think of some specific corporate actions that have these general tendencies.

3. What four financial statements are contained in most annual reports?

4. Who are some of the basic users of financial statements, and how do they use them?

5. Explain the following statement: Although the balance sheet can be thought of as a snapshot of a firm's financial position at a point in time, the income statement reports on operations over a period of time.